Islamic Asset Allocation Fund. Financial Statements for the Quarter Ended September 30, 2017

Transcription

1 Islamic Asset Allocation Fund Financial Statements for the Quarter Ended September 30, 2017

2 Faysal Islamic Asset Allocation Fund The Faysal Islamic Asset Allocation Fund (FIAAF) is an open-ended shariah compliant mutual fund. FIAAF seeks to provide long-term capital appreciation optimizing through broad mix of asset classes encompassing shariah compliant equity, fixed income & money market instruments.

3 Fund Information Mission Statement Report of the Directors of the Management Company Condensed Interim Statement of Assets and Liabilities Condensed Interim Income Statement Condensed Interim Statement of Comprehensive Income Condensed Interim Cash Flow Statement Condensed Interim Statement of Movement in Unit Holders Fund Notes to the Condensed Interim Financial Information

4 4 Faysal Islamic Asset Allocation Fund Faysal Asset Management Limited Mr. Salman Ahmed Usmani, Chairman Mr. Osman Khan, Director Syed Ibad-Ur-Rehman Chishti, Director Mr. Mohammad Zahid Ahmed, Director Mr. Farooq Hassan, Director Mr. Razi-Ur-Rahman Khan, Director/CEO Chief Financial Officer and Company Secretary of the Management Company Mr. Naved Hanif Mr. Osman Khan, Chairman Syed Ibad-Ur-Rehman Chisti, Member Mr. Farooq Hassan, Member HR Comittee Mr. Osman Khan, Chairman Syed Ibad-Ur-Rehman Chishti, Member Mr. Razi-Ur-Rahman Khan, Member Central Depository Company of Pakistan Limited, National Bank of Pakistan - Islamic Banking Dubai Islamic Bank Pakistan Limited Al-Baraka Bank Limited Bank Islami Pakistan Limited Faysal Bank Limited Islamic Banking EY Ford Rhodes, Chartered Accountants

5 Faysal Islamic Asset Allocation Fund 5 The Faysal Islamic Asset Allocation Fund endeavours to provide investors with an opportunity to earn long-term capital appreciation optimizing through broad mix of asset classes encompassing shariah compliant equity, fixed income & money market instruments.

6 6 Faysal Islamic Asset Allocation Fund The Board of Directors of the Faysal Asset Management Limited, the Management Company of the Faysal Islamic Asset Allocation Fund (FIAAF), is pleased to present the un-audited condensed interim financial information of FIAAF for the quarter ended September 30, FINANCIAL HIGHLIGHTS Quarter Ended September Total (loss) / income Operating expenses Net (loss) / income before tax Element of loss Taxation Net (loss) / income after tax NAV per unit (Rs. per unit) (49.638) (3.834) (53.472) - (53.472) - (53.472) (1.734) (6.795) ECONOMIC REVIEW: The China-Pakistan Economic Corridor (CPEC) which is still work-in-progress has already started to help Pakistan climb several rungs on the ladder of global competitiveness and economic progress. Pakistan is a resource-rich and labor abundant economy, but relatively poor infrastructure, acute energy shortfall, low Foreign Direct Investment (FDI) and narrow manufacturing base have created barriers for global integration and industrialization in Pakistan. These bottlenecks have restrained productivity over the years. In such circumstances, the investment of $59 billion under the project of China-Pakistan Economic Corridor (CPEC) is a blessing in disguise that is supposed to revive the economy of Pakistan. When market forces fail to bring convergence in the economy, government intervention to overcome the situation becomes necessary. For Pakistan, this vital role of savior is being played by CPEC, which aims to fulfill the investment saving gap, improve the industrial base and shape the manufacturing sector. Moreover, the LSM Index inclined by 13% YoY during Jul 17, which was the highest since Mar 16. Pakistan s burgeoning youth and their freewheeling attitude toward rising incomes have turned the nation into the world s fastest growing retail market. Bloomberg predicted the market to expand 8.2% per annum through as disposable income has doubled since 2010, according to research group Euromonitor International. The size of the middle class is estimated to surpass that of the U.K. and Italy in the forecast period, it said. Pakistan s improving security environment, economic expansion at near 5% and cheap consumer prices are driving shoppers to spend up big. Almost two-thirds of the nation s million people are aged under 30, according to the Jinnah Institute, an Islamabad-based think tank. Not only that, Pakistan s ranking in terms of Economic Freedom of the World 2017 report has improved by 10 notches and it stood at 127th position out of total 159 countries,

7 Faysal Islamic Asset Allocation Fund 7 where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives. Average CPI based inflation during the first quarter of the current fiscal year (July-September) witnessed increase of 3.39% compared to July-September ( ). Furthermore, Economic indicators CAD receded by 73% MoM to USD 550mn in Aug 2017, thus reducing the investors concern on sustainability of Balance of Payments. Moreover, the LSM Index inclined by 13% YoY during Jul 17, which was the highest since Mar 16. FDI escalated to $234 million in Aug 2017, while foreign exchange reserves of the country stood at $ billion. Of course, Pakistan s major problem is growing public debt, as debt services loan installments and interest would consume about 33% of federal revenue. Unprecedented growing public debt, on one hand, limits the capacity to build a strong defensive capability, and on the other hand, limits fiscal space to invest in human development and infrastructure. Pakistan faces challenges of a growing debt burden, fiscal deficit, trade deficit, and current account deficit, which are not of any less importance than the threats to internal and external security. EQUITY REVIEW Pakistan has managed to gather a spot on the global economic scene recently after achieving the status of an emerging market by Morgan Stanley Capital International (MSCI). However, certain recent developments have highlighted the susceptibility of the easily traded goods such as stocks, mutual funds and real estate backed securities for which the market has gone down significantly. However, during 1QFY18, the market dipped by 8.9%, depicting the worst quarterly return since 1QCY15 (-9.5%). On a CYTD basis, the equity bourse declined by 11.3%. As with any large market correction, it is always a combination of both psychology and fundamentals. Post recent correction from its high in May 2017, PSX 100 is already down to months low P.E. of 8x last seen when the index was around 34k level, compared to Asia Pac regional average of 14.0x and while offering DY of ~6% versus ~2.4% offered by the region. In September, equity market was revived posting 3% positive returns as local and foreign institutional confidence was recouped. Average volumes shrunk along with average valued traded. Foreign investors sold stocks worth USD 90.66m in 1QFY18. But, notably they bought stocks worth USD 28.3m in September after 14 months of incessant selling. On the local front, MF (USD37.6mn) remained the largest sellers, whereas Banks and Insurance companies supported the market with net buying of USD 33.6mn and USD 49mn respectively. With earnings season coming to an end, the market is likely to slow its focus on domestic political over the next two months as seasonality in the market can provide boost to the sentiments. Also of critical importance will be the direction of foreign flows, impacting market performance accordingly.

8 8 Faysal Islamic Asset Allocation Fund FUND PERFORMANCE Faysal Islamic Asset Allocation Fund generated return of % during the 1QFY18. By the end of 1QFY18, your fund is invested in cash (42.25%) and equities (56.13%). Going forward, your fund would keep exploring the equity financial markets to generate alpha. FUND RANKING Pakistan Credit Rating Agency Limited (PACRA) has assigned a 4-Star short term rating to Faysal Islamic Asset Allocation Fund as of September 26, ACKNOWLEDGEMENT The Board of Directors of the Management Company thanks the unit holders for their confidence in the Management, the Securities and Exchange Commission of Pakistan for its valuable support, assistance and guidance. The Board also thanks the employees of the Management Company and the Trustee for their dedication and hard work. For and on behalf of the Board Karachi: October 19, 2017 Razi-Ur-Rahman Khan Chief Executive Officer

9 Faysal Islamic Asset Allocation Fund 9 Condensed Interim Statement of Assets and Liabilities As at September 30, 2017 (Un-Audited) (Audited) September 30, June 30, Note (Rupees) Assets Bank balances 4 193,639, ,205,217 Investments 5 257,273, ,844,348 Deposits and other receivables 6,439,665 6,495,192 Preliminary expenses and floatation costs 1,139,760 1,237,483 Receivable against sale of investments - 20,029,467 Total assets 458,491, ,811,707 Liabilities Payable to the Management Company 1,269,263 4,195,044 Remuneration payable to the Trustee 74, ,559 Accrued and other liabilities 6 3,611,046 3,445,846 Dividend payable - 12,653,133 Payable against redemption of units - 284,056,132 Total liabilities 4,954, ,461,714 Net assets 453,536, ,349,993 Unit holders' fund (as per statement attached) 453,536, ,349, (Number of units) ---- Number of units in issue 5,060,356 3,746, (Rupees) Net assets value per unit The annexed notes from 1 to 12 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

10 10 Faysal Islamic Asset Allocation Fund Condensed Interim Income Statement For the Quarter Ended September 30, 2017 (Un-Audited) September 30, September 30, Income Note (Rupees) Dividend income on investments classified as 'at fair value through profit or loss' - held-for-trading 2,236, ,000 Return on bank balances 2,541, ,860 Net (loss) / gain on investments 'at fair value through profit or loss' - held-for-trading: - Net capital (loss) / gain on sale of investments (5,458,122) 17,014,253 - Net unrealised (loss) / gain on revaluation of investments (48,957,715) 2,331,003 (54,415,837) 19,345,256 Total (loss) / income (49,637,514) 20,707,116 Expenses Remuneration of the Management Company 2,151, ,370 Sales tax on Management fee 279,696 98,328 Remuneration of the Trustee 207, ,524 Sales tax on Trustee fee 27,004 22,687 Brokerage charges 205, ,538 Bank charges 26,545 13,672 SECP annual fee 341,666 35,640 Auditors' remuneration 176, ,168 Fees and subscription 44,541 48,409 Settlement charges, federal excise duty and capital value tax 122, ,118 Printing charges and other expenses 45,494 47,470 Reimbursement of expenses to / (from) the Management Company 106,662 (166,749) Amortisation of preliminary expenses and floatation costs 97,723 97,723 Total expenses 3,833,574 1,733,898 Net (loss) / gain from operating activities (53,471,088) 18,973,218 Element of loss and capital losses included in prices of units sold less those in units redeemed - net - (6,794,954) Net (loss) / income for the period before taxation (53,471,088) 12,178,264 Taxation Net (loss) / income for the period after taxation (53,471,088) 12,178,264 Allocation of net income for the period Income already paid on units redeemed 8,889,907 - (44,581,181) 12,178,264 Accounting income available for distribution Relating to capital gains - 19,345,256 Excluding capital gains (44,581,181) (7,166,992) The annexed notes from 1 to 12 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) (44,581,181) 12,178,264 Chief Financial Officer Chief Executive Officer Director

11 Faysal Islamic Asset Allocation Fund 11 Condensed Interim Statement of Comprehensive Income For the Quarter Ended September 30, 2017 (Un-Audited) September 30, September 30, (Rupees) Accounting income available for distribution (44,581,181) 12,178,264 Other comprehensive income for the period - - Total comprehensive (loss) / income for the period (44,581,181) 12,178,264 The annexed notes from 1 to 12 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

12 12 Faysal Islamic Asset Allocation Fund Condensed Interim Cash Flow Statement For the Quarter Ended September 30, 2017 (Un-Audited) September 30, September 30, (Rupees) Note CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) / income for the period before taxation (53,471,088) 12,178,264 Adjustment for non-cash and other items: Net loss / (gain) on investments 'at fair value through profit or loss' - held-for-trading: - Net capital loss / (gain) on sale of investments 5,458,122 (17,014,253) - Net unrealised loss / (gains) on revaluation of investments 48,957,715 (2,331,003) Dividend income on investments classified as 'at fair value through profit or loss' - held-for-trading (2,236,620) (910,000) Return on bank balances (2,541,703) (451,860) Amortisation of preliminary expenses and floatation costs 97,723 97,723 Element of loss and capital losses included in prices of units sold less those in units redeemed - net - 6,794,954 (3,735,851) (1,636,175) Increase in assets Prepayments, deposits and other receivables (135,133) (80,728) Decrease / (increase) in liabilities Payable to the Management Company (2,925,781) (288,029) Remuneration payable to the Trustee (37,352) (2,720) Accrued and other liabilities 165,200 (361,364) (2,797,933) (652,113) (6,668,917) (2,369,016) Proceeds from sale of investments 219,911, ,534,248 Payments made against purchase of investments (159,726,130) (156,436,970) Return received on bank balances 2,535, ,545 Dividend received 2,433, ,000 Net cash generated from operating activities 58,485,041 57,829,807 CASH FLOWS FROM FINANCING ACTIVITIES Amounts received against issue of units 288,245,051 8,770,711 Payments made against redemption of units (439,643,152) (95,255,111) Dividend paid (12,653,133) Net cash used in financing activities (164,051,234) (86,484,400) Net decrease in cash and cash equivalents during the period (105,566,193) (28,654,593) Cash and cash equivalents at beginning of the period 299,205,217 62,359,954 Cash and cash equivalents at end of the period 4 193,639,024 33,705,361 The annexed notes from 1 to 12 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

13 Faysal Islamic Asset Allocation Fund 13 Condensed Interim Statement of Movement in Unit Holders Fund For the Quarter Ended September 30, 2017 (Un-Audited) September 30, September 30, (Rupees) Net assets value per unit at beginning of the period Net assets value per unit at end of the period Net assets at beginning of the period 374,349, ,603,079 Amounts received on issue of units * 288,245,051 8,770,711 Amounts paid on redemption of units ** (155,587,020) (95,255,111) 132,658,031 (86,484,400) Element of loss and capital losses included in prices of units sold less those in units redeemed - net - 6,794,954 Income already paid on units redeemed (8,889,907) - Total comprehensive (loss) / income for the period (44,581,181) 12,178,264 Net assets at end of the period 453,536, ,091,897 Distribution for the period Undistributed income / (loss) brought forward Realised gain 28,844,267 1,129,530 Unrealised loss (22,120,887) (9,200,898) 6,723,380 (8,071,368) Accounting income available for distribution Relating to capital gains - 19,345,256 Excluding capital gains (44,581,181) (7,166,992) (44,581,181) 12,178,264 Undistributed (loss) / income carried forward (37,857,801) 4,106,896 Realised gain 17,937,644 4,751,532 Unrealised loss (55,795,445) (644,636) (37,857,801) 4,106, (Number of units) ---- * Number of units issued 2,960,085 85,174 ** Number of units redeemed 1,645, ,446 The annexed notes from 1 to 12 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

14 14 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 1. LEGAL STATUS AND NATURE OF BUSINESS Faysal Islamic Asset Allocation Fund (the Fund) has been established under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 (the NBFC Rules) and has been authorised as a unit trust scheme by the Securities and Exchange Commission of Pakistan (SECP) on June 12, It has been constituted under a Trust Deed, dated May 18, 2015, between Faysal Asset Management Limited (the Management Company), a company incorporated under the Companies Ordinance, 1984 and Central Depository Company of Pakistan Limited (CDC) as the Trustee, also a company incorporated under the Companies Ordinance, The Fund is a Shariah Compliant open-ended asset allocation fund and is listed on the Pakistan Stock Exchange Limited. Units are offered for public subscription on a continuous basis and the units are transferable and can be redeemed by surrendering them to the Fund. Title to the assets of the fund are held in the name of CDC as a Trustee of the Fund. The Fund was launched on September 09, The objective of the Fund is to earn competitive riba free return by investing in various Shariah Compliant asset classes / instruments based on the market outlook. The Fund is categorised as an "Islamic Asset Allocation Scheme" as per the Circular No.7 of 2009 issued by SECP. The Pakistan Credit Rating Agency Limited (PACRA) has assigned a "4-Star" short term rating to Faysal Islamic Asset Allocation Fund as of September 26, JCR - VIS has awarded an "AM3+" asset manager rating to the Management Company as of October 12, BASIS OF MEASUREMENT This condensed interim financial information has been prepared in accordance with the requirements of International Accounting Standard 34: Interim Financial Reporting, the Trust Deed, the NBFC Rules, Non- Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations) and directives issued by SECP. In case where requirements differ, the requirements of the Trust Deed, the NBFC Rules, the NBFC Regulations or the directives issued by the SECP prevail. This condensed interim financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the annual financial statements of the Fund for the year ended June 30, The Companies Ordinance, 1984 has been repealed after the enactment of the Companies Act, 2017 (the Act) on May 30, However, the SECP vide its Circular No.23 dated October 4, 2017 allowed Companies whose financial year closes on or before December 31, 2017 to prepare the financial statements in accordance with the provisions of the repealed Companies Ordinance, The Act does not impact the condensed interim financial information of the Fund for the period ended September 30, This condensed interim financial information is presented in Pakistani Rupees which is the Fund's functional and presentation currency.

15 Faysal Islamic Asset Allocation Fund 15 Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, JUDGMENTS AND RISK MANAGEMENT Except for change in note 3.1, the accounting policies and methods of computation adopted in the preparation of this condensed interim financial information and the significant judgements made by the management in applying the accounting policies and key sources of estimation uncertainity are the same as those applied in the preparation of the financial statements as at and for the year ended June 30, The Fund s financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended June 30, Change in accounting policy - element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed The SECP vide its statutory notification (S.R.O) No.756(I) / 2017 dated August 3, 2017, has introduced certain amendments in Schedule V of the NBFC Regulations, resulting in change in the treatment of element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed, earlier the element was recognized in the income statement to the extent that it is represented by income earned during the year and unrealized appreciation / (diminution) arising during the year on available for sale securities was included in the Distribution Statement. As per the aforesaid SRO "element of income is a transaction of capital nature and receipt and payment of element of income is taken to the unit holder's fund." As a result the Fund has made certain changes in this condensed interim financial information as mentioned in note BANK BALANCES Note (Un-Audited) (Audited) September 30, June 30, (Rupees) Cash at bank - PLS savings accounts ,639, ,205, These carry mark-up ranging between 2.40% to 5.60% (June 30, 2017: 2.40% and 6.10%) per annum and include balance of Rs million (June 30, 2017: million) held with Faysal Bank Limited, a related party. 5. INVESTMENTS 'At fair value through profit or loss' - held-for-trading Shariah compliant listed equity securities ,273, ,844,348

16 16 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 5.1 Shariah compliant listed equity securities * - held-for-trading Name of the investee company Note * Ordinary shares having a face value of Rs.10 each unless stated otherwise Number of shares As at July 01, 2017 Purchased during the period Bonus / right shares received Disposed off during the period As at September Cost as at September 30, 2017 Market value as at September 30, 2017 Unrealised gain / (loss) on revaluation 30, 2017 Net assets (Rupees) Investment as % of Total investments Investee company paidup capital Refinery Attock Refinery Limited 30,000 5,000-16,200 18,800 8,028,175 7,768,348 (259,827) 1.71% 3.02% 0.02% National Refinery Limited 25,000 4,000-11,000 18,000 13,471,082 11,950,380 (1,520,702) 2.63% 4.65% 0.02% 21,499,257 19,718,728 (1,780,529) 4.35% 7.66% 0.04% Oil and gas marketing companies Hascol Petroleum Limited , ,000 11,100 3,697,206 3,120,099 (577,107) 0.69% 1.21% 0.01% Sui Northern Gas Pipelines Limited 265, , , ,000 37,966,630 34,134,300 (3,832,330) 7.53% 13.27% 0.04% 41,663,836 37,254,399 (4,409,437) 8.21% 14.48% 0.05% Oil and gas exploration companies Mari Petroleum Company Limited 11,000 5,980-3,780 13,200 20,021,509 19,866,132 (155,377) 4.38% 7.72% 0.01% Chemical ICI Pakistan Limited 10, ,800 11,478,623 9,867,096 (1,611,527) 2.18% 3.84% 0.01% Fertilizer Engro Corporation Limited 105,400 19,000-84,400 40,000 13,903,186 12,123,600 (1,779,586) 2.67% 4.71% 0.01% Engro Fertilizers Limited 30, , ,903,186 12,123,600 (1,779,586) 2.67% 4.71% 0.01% Cement Lucky Cement Limited 65,000 11,000-30,000 46,000 39,715,651 25,998,280 (13,717,371) 5.73% 10.11% 0.01% Maple Leaf Cement Factory Limited - 35,000-35, Cherat Cement Company Limited - 28, ,000 11,632,283 3,359,440 (8,272,843) 0.74% 1.31% 0.02% Kohat Cement Company Limited 27,000 13,000-5,000 35,000 1,405,000 5,248,600 3,843, % 2.04% 0.02% Pioneer Cement Limited 70,000 10,000-10,000 70,000 9,753,492 6,295,800 (3,457,692) 1.39% 2.45% 0.03% 62,506,426 40,902,120 (21,604,306) 9.02% 15.90% 0.08% Food and personal care product Engro Foods Limited 30, , Paper and board Packages Limited 19,350 10,000-19,350 10,000 7,022,060 5,770,100 (1,251,960) 1.27% 2.24% 0.01% Engineering International Steels Limited 315,000 85, , ,000 16,984,927 15,141,250 (1,843,677) 3.34% 5.89% 0.03% Crescent Steel & Allied Products Limited 41,900 43,100-15,000 70,000 15,990,147 11,073,300 (4,916,847) 2.44% 4.30% 0.09% Amreli Steels Limited - 108,900-20,000 88,900 9,609,544 9,065,133 (544,411) 2.00% 3.52% 0.03% Mughal Iron and Steel Industries Limited 67,000 45,000-7, ,000 6,338,118 6,008,100 (330,018) 1.32% 2.34% 0.04% International Industries Limited 46,200 39,000-19,200 66,000 21,936,165 19,153,200 (2,782,965) 4.22% 7.44% 0.06% 70,858,901 60,440,983 (10,417,918) 13.33% 23.49% 0.25% Power generation and distribution The Hub Power Company Limited ,000 90,000-10, ,000 38,615,576 33,543,000 (5,072,576) 7.40% 13.04% 0.03%

17 Faysal Islamic Asset Allocation Fund 17 Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) Name of the investee company Note Number of shares As at July 01, 2017 Purchased during the period Bonus / right shares received Disposed off during the period As at September Cost as at September 30, 2017 Market value as at September 30, 2017 Unrealised gain / (loss) on revaluation 30, 2017 Net assets Investment as % of Total investments Investee company paidup capital Pharmaceuticals The Searle Company Limited 28,500 2,000-13,500 17,000 10,581,099 6,866,640 (3,714,459) 1.51% 2.67% 0.01% Commercial banks Meezan Bank Limited 9,000 25,000 1,500 9,000 26,500 1,970,350 1,972,395 2, % 0.77% 0.00% Cable and electrical goods Pak Elektron Limited 35,000 15,000-25,000 25,000 2,678,931 1,898,750 (780,181) 0.42% 0.74% 0.01% Automobile Assembler Pak Suzuki Motor Company Limited 6,000 5,000-1,000 10,000 6,971,452 4,576,700 (2,394,752) 1.01% 1.78% 0.01% Honda Atlas Cars (Pakistan) Limited 1,500 2, ,500 2,568,409 1,888,215 (680,194) 0.42% 0.73% 0.00% 9,539,861 6,464,915 (3,074,946) 1.43% 2.51% 0.01% Transport Pakistan National Shipping Corporation 4, , , ,145 (144,688) 0.13% 0.23% 0.00% September 30, ,482, ,980 1, ,730 1,397, ,068, ,273,003 (55,795,445) 56.72% % 0.53% June 30, ,965, ,844,348 (22,120,887) This investment includes bonus shares having market value of Rs.0.31 million withheld by the investee company during previous periods as issuance of bonus shares has been made taxable through Finance Act, Consequently, bonus shares equivalent to 5% (representing tax impact of the bonus announcement) have been withheld by the investee company. The Mutual Funds Association of Pakistan (MUFAP) has filed a petition in the Honorable Sindh High Court (SHC) to declare the amendments brought in the Income Tax Ordinance, 2001 with reference to tax on bonus shares for collective investment schemes as null and void and not applicable on the mutual funds, based on the premise of exemption given to mutual funds under clause 47B and 99 of Second Schedule to the Income Tax Ordinance, The case was dismissed by SHC against MUFAP and various other plaintiffs vide judgement dated September 08, However, MUFAP along with various other mutual funds has filed an appeal before SHC under the section 3 of the Law Reforms Ordinance, The SHC has suspended the operation of the earlier impugned order and has granted stay from tax on bonus shares Following shares have been pledged with National Clearing Company of Pakistan Limited (NCCPL) security against settlement of the Fund's trades in terms of Circular No.11 dated October 23, 2007 issued by SECP: (Un-Audited) (Audited) (Un-Audited) (Audited) September 30, June 30, September 30, June 30, (Number of shares) (Rupees) Sui Northern Gas Pipelines Limited - 100,000-14,892,000 The Hub Power Company Limited 200, ,000 22,362,000 23,486,000 Engro Fertilizers Limited - 29,000-1,601, , ,000 22,362,000 39,979,960

18 18 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 6. ACCRUED AND OTHER LIABILITIES Note (Un-Audited) (Audited) September 30, June 30, (Rupees) SECP annual fee payable 341, ,467 Brokerage payable 99, ,532 Accrued liabilities 995, ,874 Provision for Sindh Workers' Welfare Fund (SWWF) 6.1 1,493,304 1,493,304 Provision for indirect taxes and duties , ,669 3,611,046 3,445, As a consequence of the 18th amendment to the Constitution of Pakistan, in May 2015 the Sindh Workers Welfare Fund Act, 2014 (SWWF Act) had been passed by the Government of Sindh as a result of which every industrial establishment located in the Province of Sindh, the total income of which in any accounting year is not less than Rs.0.5 million, is required to pay Sindh Workers Welfare Fund (SWWF) in respect of that year a sum equal to two percent of such income. The matter was taken up by the MUFAP with the Sindh Revenue Board (SRB) collectively on behalf of various asset management companies (including the Management Company of the Fund) whereby it was contested that mutual funds should be excluded from the ambit of the SWWF Act as these were not industrial establishments but were pass through investment vehicles and did not employ workers. The SRB held that mutual funds were included in the definition of financial institutions as per the Financial Institution (Recovery of Finances) Ordinance, 2001 and were, hence, required to register and pay SWWF under the SWWF Act. Thereafter, MUFAP has taken up the matter with the Sindh Finance Ministry to have CISs / mutual funds excluded from the applicability of SWWF. However, as a matter of abundant caution, the Board of MUFAP and the members in the Extra Ordinary General Meeting held on January 11, 2017 decided to record a provision of Sindh WWF from the date of enactment of Sindh WWF Act, 2014 (which was May 21, 2015) till January 12, 2017 and will continue to record such provision going forward CONTINGENCIES AND COMMITMENTS There were no contingencies and commitments as at September 30, 2017 except as disclosed in note TAXATION The provision for SWWF is now being made on a daily basis. Had the provision for SWWF not been recorded in the condensed interim financial information of the Fund, the net assets value of the Fund as at September 30, 2017 would have been higher by Rs.0.30 (0.33%) per unit (June 30, 2017: Rs.0.40 (0.40%) per unit). There is no change in the status of the appeal filed by the Federal Board of Revenue in the Supreme Court of Pakistan in respect of application of Federal Excise Duty at the rate of 16% on the services of the Management Company, as reported in note 13.3 to the annual financial statements of the Fund for the year ended June 30, Had the provision not been made, the net assets value per unit of the Fund would have been higher by Rs.0.13 (0.15%) per unit (June 30, 2017: Rs.0.18 (0.18%) per unit). The income of the Fund is exempt from income tax under Clause (99) of Part 1 of the Second Schedule to the Income Tax Ordinance, 2001 (Clause 99) subject to the condition that not less than 90 percent of the accounting income for the year, as reduced by capital gains, whether realized or unrealized, is distributed in cash amongst the unit holders. Furthermore, as per regulation 63 of the NBFC Regulations, the Fund is required to distribute 90% of the net accounting income other than capital gains to the unit holders in cash. The Fund is also exempt from the provision of Section 113 (minimum tax) under clause 11A of Part IV of the Second Schedule to the Income Tax Ordinance, Since the management intends to distribute the income earned by the Fund during the year to the unit holders in cash in the manner as explained above, accordingly, no provision for taxation has been made in this condensed interim financial information for the period ended September 30, 2017.

19 Faysal Islamic Asset Allocation Fund 19 Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 9. TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES Details of transactions with the related parties and balances with them at the period end are as follows: Transactions during the period (Un-Audited) September 30, September 30, (Rupees) Faysal Asset Management Limited (Management Company) Remuneration of the Management Company 2,151, ,370 Sales tax on Management fee 279,696 98,328 Reimbursement of expenses from the Management Company 106, ,749 Faysal Bank Limited (Group / Associated Company) Return on PLS savings account 87,133 2,004 Bank charges 4,435 - Central Depository Company of Pakistan Limited - (Trustee of the Fund) Remuneration of the Trustee 207, ,524 Sales tax on Trustee fee 27,004 22,687 Settlement charges 33,996 22,314 Unit holder holding 10% or more units Fauji Fertilizer Bin Qasim Limited Provident Fund Issue of Nil units (2016: 197,597 units) - 21,010,489 Outstanding balances (Un-Audited) (Audited) September 30, June 30, (Rupees) Faysal Asset Management Limited (Management Company) Management fee payable 772,506 1,015,870 Sales tax payable on Management fee 100, ,068 Sales load payable 39,543 2,796,979 Reimbursement of expenses receivable from / (payable to) the Management Company 356, ,127 Faysal Bank Limited (Group / Associated Company) Balance in PLS savings account 1,891,092 11,005,190 Central Depository Company of Pakistan Limited - (Trustee of the Fund) Remuneration payable to the Trustee 65,668 98,725 Sales tax payable on Trustee fee 8,539 12,834 Security deposit 100, ,000 Funds under common management Faysal Asset Allocation Fund Payable from Faysal Asset Allocation Fund - 226,542,114 Faysal MTS Fund Payable from Faysal MTS Fund - 821,879 Faysal Balanced Growth Fund Payable from Faysal Balanced Growth Fund - 34,898,856 Faysal Saving Growth Fund Payable from Faysal Saving Growth Fund - 21,793,283 Unit holders holding 10% or more units Fauji Fertilizer Bin Qasim Limited Provident Fund * Units in issue 430,966 units (June 30, 2017: 430,966 units) 38,627,483 43,066,432 BAFL Employees Provident Fund * Units in issue 403,519 units (June 30, 2017: 403,519 units) 36,167,408 40,323,654 * Unit holding as at September 30, 2017, is less than 10%.

20 20 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 10. FAIR VALUE OF FINANCIAL INSTRUMENTS IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements and disclosures about fair value measurement where such measurements are required as permitted by other IFRSs. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). Adoption of IFRS 13 has not affected the condensed interim financial information. Financial assets which are tradable in an open market are revalued at the market prices prevailing on the statement of assets and liabilities date. The estimated fair value of all other financial assets and financial liabilities is considered not significantly different from book value. The following table shows financial instruments recognized at fair value, analyzed between those whose fair value is based on: Level 1: quoted prices in active markets for identical assets or liabilities; Level 2: those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: those with inputs for the asset or liability that are not based on observable market data (unobservable inputs). Financial assets measured at fair value Deposits and other receivables September 30, 2017 (Un-Audited) Carrying amount Fair value Cash and cash equivalents Total Investments Level 1 Level 2 Level 3 Total (Rupees) 'At fair value through profit or loss' - held-for-trading Shariah compliant listed equity securities 257,273, ,273, ,273, ,273,003 Financial assets not measured at fair value Bank balances ,639, ,639, Deposits and other receivables - 5,735,429-5,735, ,273,003 5,735, ,639, ,647, ,273, ,273,003

21 Faysal Islamic Asset Allocation Fund 21 Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) Financial assets measured at fair value Deposits and other receivables June 30, 2017 (Audited) Carrying amount Fair value Cash and cash equivalents Total Investments Level 1 Level 2 Level 3 Total (Rupees) 'At fair value through profit or loss' - held-for-trading Shariah compliant listed equity securities 351,844, ,844, ,844, ,844,348 Financial assets not measured at fair value Bank balances ,205, ,205, Deposits and other receivables - 5,926,089-5,926, Receivable against sale of investments - 20,029,467-20,029, ,844,348 25,955, ,205, ,005, ,844, ,844,348 During the period ended September 30, 2017, there were no transfers between level 1 and level 2 fair value measurements, and no transfer into and out of level 3 fair value measurements. September 30, 2017 (Un-Audited) June 30, 2017 (Audited) 'At fair value through profit and loss' - heldfor-trading Other financial liabilities Total 'At fair value through profit and loss' - heldfor-trading Other financial liabilities Total (Rupees) Financial liabilities Payable to the Management Company - 1,168,838 1,168,838-4,062,976 4,062,976 Remuneration payable to the Trustee - 65,668 65,668-98,725 98,725 Accrued and other liabilities - 909, , , ,811 Payable against redemption of units ,056, ,056,132 Dividend payable ,653,133 12,653,133-2,143,771 2,143, ,845, ,845,777

22 22 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 11. GENERAL As per Directive 23 of 2016 dated July 20, 2016 issued by SECP, the Total Expense Ratio of the Fund is 3.56% as on September 30, 2017 which includes 0.68% representing Government Levies, Provision for SWWF and SECP fee. The SECP vide its statutory notification (S.R.O) No.756(I) / 2017 dated August 3, 2017, has introduced certain amendments in Schedule V of the NBFC Regulations, resulting in certain changes in the presentation of Income Statement and Statement of Movement in Reserves or Unit Holders' Fund, and deletion of Distribution Statement. The same is applicable on the financial statements beginning on or after July 1, Accordingly, the financial and other impacts due to the applicability of the amended NBFC Regulations, 2008, if any, have been incorporated from this financial period. Had the above mentioned changes not been made in the condensed interim financial information the net loss for the period would have been lower by Rs million Figures have been rounded off to the nearest rupee. 12. DATE OF AUTHORISATION FOR ISSUE This condensed interim financial information was authorised for issue on October 19, 2017 by the Board ofdirectors of the Management Company. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

23 Faysal Islamic Asset Allocation Fund 23

24 24 Faysal Islamic Asset Allocation Fund

25 Faysal Islamic Asset Allocation Fund 25

26 26 Faysal Islamic Asset Allocation Fund (1.734) (6.795) Quarter Ended September (49.638) (3.834) (53.472) - (53.472) - (53.472) 89.63

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